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Aussie, kiwi hit 26-month highs after Fed statement

7/27/2017, 2:29:48 PMMarket Analysis
Aussie, kiwi hit 26-month highs after Fed statement

The Australian and New Zealand dollars climbed to 26-month highs against their U.S. counterpart on Thursday, as demand for the greenback weakened amid fresh uncertainty over additional interest rate hikes later this year.

AUD/USD climbed 0.51% to 0.8046, the highest since May 2015.

At the conclusion of its two-day policy meeting on Wednesday, the Fed left interest rates unchanged at 1.25% in a widely expected move.

The central bank also said it planned to start shrinking its balance sheet "relatively soon"and noted weakness in U.S. inflation, sparking doubts over the possibility of a third rate hike this year.

NZD/USD rose 0.23% to trade at 0.7535, also the highest since May 2015.

Investors also continued to focus on the investigation into alleged links between U.S. President Donald Trump’s administration and Russia in last year’s election.

On Monday, Jared Kushner, Trump’s son-in-law and a senior White House adviser, told Senate investigators he had met with Russian officials four times last year but said he did not collude with Moscow.

Investors fear the persistent political turmoil will derail the Trump administration’s pro-growth economic agenda of tax cuts and infrastructure spending, which helped propel the dollar to 14-year peaks after the November election.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at a fresh 13-month low of 93.29